Cri­sis pre­ven­tion

Enterprise - - Economy -

The new EU su­per­vi­sory sys­tem helps to pre­vent fu­ture fi­nan­cial crises. The ex­pe­ri­ence of the past un­der­lines the need for stronger mul­ti­lat­eral sur­veil­lance of eco­nomic poli­cies within the EU. As for the Cen­tral and East­ern Euro­pean economies, mem­ber states need to re­sist the emer­gence of im­bal­ances and foster an ef­fi­cient al­lo­ca­tion of for­eign cap­i­tal. At the global level an ap­pro­pri­ate strat­egy to re­duce the global im­bal­ances should be adopted – e.g. China should be en­cour­aged to re­duce its national sav­ings sur­plus and change its ex­change rate pol­icy. The ra­tio­nale for pol­icy co­or­di­na­tion is thus strong, in the ab­sence of which, mem­ber states would not suf­fi­ciently take into ac­count the favourable or un­favourable cross-coun­try spillover ef­fects of their pol­icy choice. ‘In­ter­nal­iz­ing’ these spillover ef­fects in their pol­icy choices would ben­e­fit both the Euro­pean Union as a whole and its mem­ber states

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